Views & News, Maybank IB (2010-11-12)
Friday, November 12, 2010
MARKET STRATEGY
Here we go again
Moving the target. We move our index targets to 1,550 for end-2010 and 1,660 for end-2011. It seems trivial now to suggest the beginnings of a liquidity-driven market; we point instead to a number of areas and stocks that remain good value. In addition, we look to previous liquidity runs to assess how stretched valuations can become, and potential canary-in-the-coal mine events that may be turning points.
RESULTS REVIEW
Star Publications RM3.48: Hold
Plodding giant Shariah-compliant
Momentum fading. RM43m net profit (+32%YoY/-14%QoQ) took 9M to RM134m (+54%). This was within expectations. 9M growth was off the low 1H09 recession-hit base and high newsprint costs. The latest quarter underlines the anemic prospects. Circulation is falling, demographics shifting and corporate transparency remains weak. We are Holders for the yield but much prefer Media Prima.
JT International RM5.93: Buy
Thriving in adversity
Maintain Buy; forecasts and TP raised. JTI's continued top-line growth and profit margin expansion reassure us that it will continue to thrive in a shrinking market. We have raised our 2010-12 earnings forecasts by 2-7% on better market share assumptions and consequently raise our DCF-based TP by 8% to RM6.50 (from RM6.00).
MBM Resources RM3.02: Buy
Beats street, Perodua provides the beat Shariah-compliant
Target price raised to RM5.00 (+10%). MBM's 3Q results were sequentially softer but 9M10 net profit of RM113m was still ahead of our and consensus full-year forecasts of RM123-124m, driven mainly by stronger Perodua earnings. We lift our 2010-12 EPS by 9-12% as we raise our Perodua vehicle sales by 5%. Our target price is raised to RM5.00, based on 8x PER; and Buy recommendation unchanged.
Technicals
The FBM KLCI tumbled 14.31 points to 1,513.70 yesterday. Its resistance area at 1,513 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,490 and 1,507.
Trading idea for today is a SHORT TERM BUY call on TASCO.
Other Local News
Maybank: BII's rally benefits Maybank. Maybank 97.5%-owned PT Bank Internasional Indonesia Tbk (BII) saw its share price run over the past two days, jumping 24.5% from 490 rupiah (17 sen) to end at all time high of 610 rupiah yesterday. Maybank's blended cost of acquiring BII ranged between 429 rupiah to 455 rupiah. In FY2009, Maybank wrote down its carrying value of BII by some 20% to 364 rupiah per share due to a goodwill impairment charge. (Source: The Edge Financial Daily)
MAHB: Khazanah raises RM396m through MAHB shares placement. Khazanah Nasional Bhd raised gross proceeds of RM396m after a successful placement of 66m Malaysia Airports Holdings Bhd (MAHB) shares at RM6 each. The disposal has reduced Khazanah’s stake to 54% from 60% previously. RHB Investment Bank, HSBC and Nomura Singapore Ltd, as joint placement agents successfully executed a placement of the 66m shares. There was strong demand from both foreign and domestic institutional investors for the placement. (Source: Bernama)
Proton: Offers Mitsubishi platforms to widen tie-up. Proton Holdings Bhd has offered its strategic partner Mitsubishi Motor Corp (MMC) access to its Exora multi-purpose vehicle and Persona sedan platforms. Proton is also developing a new model to replace the current Persona sedan. (Source: Business Times)
Sunrise: Publika announces Big as its anchor tenant. Publika, the retail gallery developed by Sunrise Bhd at Dutamas will be the first shopping gallery to have an aisle-less marketplace with Big Sdn Bhd as its anchor tenant. Big, which is engaged in the food and beverage products business and retailing of quality food produce, will cover 49,000 sq ft in Publika. Other prominent retailers would include British India and Shanghai. Publika is expected to open mid-2011. The current take up rate for Publika stands at 30%. (Source: Bernama)
Tan Chong: Launches new Renault car. Tan Chong Motor Holdings Bhd's subsidiary TC Euro Cars Sdn Bhd yesterday launched a new Renault model called Megane Renaultsport 250 Cup. It will be sold at RM229,800 on the road with a three years warranty, excluding insurance. (Source: The Edge Financial Daily)
Boustead: Sells assets to REIT unit, and then leases them back. Boustead Holdings Bhd plans to sell for RM189.2m its Sabah's Sutera estate, Taiping rubber plantation and Trong oil mill to Al-Hadharah Boustead REIT, and then lease back these assets. The disposal and leaseback will allow Boustead to realise the underlying value of the plantation assets while retaining the productive use of the assets. The move will result in a cash inflow for the group and its subsidiaries, which will be used to reduce bank borrowings by the group and potentially save RM9.5mil interest expense per annum for the group. (Source: The Star)
Here we go again
Moving the target. We move our index targets to 1,550 for end-2010 and 1,660 for end-2011. It seems trivial now to suggest the beginnings of a liquidity-driven market; we point instead to a number of areas and stocks that remain good value. In addition, we look to previous liquidity runs to assess how stretched valuations can become, and potential canary-in-the-coal mine events that may be turning points.
RESULTS REVIEW
Star Publications RM3.48: Hold
Plodding giant Shariah-compliant
Momentum fading. RM43m net profit (+32%YoY/-14%QoQ) took 9M to RM134m (+54%). This was within expectations. 9M growth was off the low 1H09 recession-hit base and high newsprint costs. The latest quarter underlines the anemic prospects. Circulation is falling, demographics shifting and corporate transparency remains weak. We are Holders for the yield but much prefer Media Prima.
JT International RM5.93: Buy
Thriving in adversity
Maintain Buy; forecasts and TP raised. JTI's continued top-line growth and profit margin expansion reassure us that it will continue to thrive in a shrinking market. We have raised our 2010-12 earnings forecasts by 2-7% on better market share assumptions and consequently raise our DCF-based TP by 8% to RM6.50 (from RM6.00).
MBM Resources RM3.02: Buy
Beats street, Perodua provides the beat Shariah-compliant
Target price raised to RM5.00 (+10%). MBM's 3Q results were sequentially softer but 9M10 net profit of RM113m was still ahead of our and consensus full-year forecasts of RM123-124m, driven mainly by stronger Perodua earnings. We lift our 2010-12 EPS by 9-12% as we raise our Perodua vehicle sales by 5%. Our target price is raised to RM5.00, based on 8x PER; and Buy recommendation unchanged.
Technicals
The FBM KLCI tumbled 14.31 points to 1,513.70 yesterday. Its resistance area at 1,513 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,490 and 1,507.
Trading idea for today is a SHORT TERM BUY call on TASCO.
Other Local News
Maybank: BII's rally benefits Maybank. Maybank 97.5%-owned PT Bank Internasional Indonesia Tbk (BII) saw its share price run over the past two days, jumping 24.5% from 490 rupiah (17 sen) to end at all time high of 610 rupiah yesterday. Maybank's blended cost of acquiring BII ranged between 429 rupiah to 455 rupiah. In FY2009, Maybank wrote down its carrying value of BII by some 20% to 364 rupiah per share due to a goodwill impairment charge. (Source: The Edge Financial Daily)
MAHB: Khazanah raises RM396m through MAHB shares placement. Khazanah Nasional Bhd raised gross proceeds of RM396m after a successful placement of 66m Malaysia Airports Holdings Bhd (MAHB) shares at RM6 each. The disposal has reduced Khazanah’s stake to 54% from 60% previously. RHB Investment Bank, HSBC and Nomura Singapore Ltd, as joint placement agents successfully executed a placement of the 66m shares. There was strong demand from both foreign and domestic institutional investors for the placement. (Source: Bernama)
Proton: Offers Mitsubishi platforms to widen tie-up. Proton Holdings Bhd has offered its strategic partner Mitsubishi Motor Corp (MMC) access to its Exora multi-purpose vehicle and Persona sedan platforms. Proton is also developing a new model to replace the current Persona sedan. (Source: Business Times)
Sunrise: Publika announces Big as its anchor tenant. Publika, the retail gallery developed by Sunrise Bhd at Dutamas will be the first shopping gallery to have an aisle-less marketplace with Big Sdn Bhd as its anchor tenant. Big, which is engaged in the food and beverage products business and retailing of quality food produce, will cover 49,000 sq ft in Publika. Other prominent retailers would include British India and Shanghai. Publika is expected to open mid-2011. The current take up rate for Publika stands at 30%. (Source: Bernama)
Tan Chong: Launches new Renault car. Tan Chong Motor Holdings Bhd's subsidiary TC Euro Cars Sdn Bhd yesterday launched a new Renault model called Megane Renaultsport 250 Cup. It will be sold at RM229,800 on the road with a three years warranty, excluding insurance. (Source: The Edge Financial Daily)
Boustead: Sells assets to REIT unit, and then leases them back. Boustead Holdings Bhd plans to sell for RM189.2m its Sabah's Sutera estate, Taiping rubber plantation and Trong oil mill to Al-Hadharah Boustead REIT, and then lease back these assets. The disposal and leaseback will allow Boustead to realise the underlying value of the plantation assets while retaining the productive use of the assets. The move will result in a cash inflow for the group and its subsidiaries, which will be used to reduce bank borrowings by the group and potentially save RM9.5mil interest expense per annum for the group. (Source: The Star)
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